$1.6 Trillion AUM Franklin Templeton is all in on Crypto, Tokenization, & Stablecoins!

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
And so this is all on kind of the investing
side of the house and then on the building side
of the house. You know, it really started with that
tokenized money market fond. And yeah, so the term benji
relates to, you know, one Benji token is one share
of ownership in this money market fond that that's on
chain and fully on chain, No, no duplicate.

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will be in a description. Hey, folks, welcome into the

(01:23):
Thinking Crypto podcast. I'm your host, Tony Edward, and joining
me today is Christopher Jensen, who is the director of
Digital acid Research for Franklin Templeton. Christopher, great to have.

Speaker 3 (01:33):
You, Thanks Tony. Happy to be here.

Speaker 2 (01:36):
Yeah, Christopher, I'm excited to speak with you. Franklin Templeton
is certainly a power player and on Wall Street, and
you've launched some very interesting digital asset tools, products, services
and much more, and I want to dive into that.
Let's kick it off with your background. Tell us a
bit about yourself and your professional background.

Speaker 3 (01:55):
Yeah, thank you.

Speaker 1 (01:57):
So, I guess, like several both my firm and across
some of our peers, you know, I do have a
Tratify background, so you know, always been involved on the
byside principal investing for about twenty years now, a lot
of that in credit private credit, you know in particular,
and then for the last probably eight really at this

(02:19):
technic intersection of technology and finance, and so you know,
we were doing a lot of the early fintech activities
for the firm for Franklin and you know, I think
once you're at that tip of the spear, you know,
in terms of technology and finance, and you're you're kind
of deep in fintech and and then you start to see,
you know, what blockchains can do. You know, I guess

(02:39):
over time it went from like ninety nine percent fintech
one percent crypto, and now it's you know, one hundred
percent uh crypto. But I think I I first got
the bug slightly later than you did. It was twenty seventeen,
really just started kind of reading white papers paying attention.
I did wait for the new kind of tax you

(03:01):
of twenty eighteen to actually you know, dip dip the
toes in and yeah, the you know, once once, once
you do that first swap. And for me it was
actually uh getting involved in some of those early Web
three video games was that was that was a pretty.

Speaker 3 (03:19):
Interesting aha moment. And you know, once you once you
get kind of get crypto pilled, right, you know, it was,
uh the rest is history. Yeah. Absolutely.

Speaker 2 (03:26):
Now, with your plethora of experience in the trad fire
world and uh this technology comes along, do you see
it as a natural evolution of of the Internet and
the way we are going to operate markets and things
like that.

Speaker 1 (03:42):
Yeah, definitely, I'm kind of in the camp that it's
both an evolution and upgrade to the Internet. I love
that phrase that, Like one of the original sense of
the of the Internet, right is that it didn't have
the ability to send money. You know, you can send
an email anywhere in the world permissionlessly, but you know,
you can't do that with money. And I think at
the time it was too hard of a you know,
computer science problem, the double spending problem.

Speaker 3 (04:03):
And but you know, since.

Speaker 1 (04:04):
Then, with cryptography and blockchains, we've we've figured that out, right,
So I do think, you know, it's an upgrade to
the Internet, and I always get a shout out to
you know, a Christison's Read write own and that kind
of mental model.

Speaker 3 (04:18):
I think that's that's wonderful.

Speaker 1 (04:20):
Uh, as well as though an upgrade to our financial system,
and so obviously a Frankel Tembleton. You know, we've kind
of been sitting at the at the nexus of this,
you know, having over eighty years kind of you know
doing investment management, asset management on a global scale, and
so that that involves lots of ledgers, lots of you know,
middle ops and backups, and and dealing with lots of

(04:42):
different ways to move money and value around the world
and with respect to clients and assets.

Speaker 3 (04:48):
Uh.

Speaker 1 (04:49):
And so I think when we saw blockchain technology, right,
it really was an AHA moment on the financial system
upgrade side just as much as it was on the
internet upgrade side.

Speaker 3 (05:00):
Yeah.

Speaker 2 (05:01):
Absolutely, So maybe you could take us behind the curtain
a bit, because I'm very fascinated as to what your
R and D process looks like when it comes to
looking at new technology like blockchain. So let's say, you know,
you guys don't make decisions overnight. It's not like, oh,
here's bitcoin, let's right away start something. But I'm sure
there's a lot of trial and error testing happening. So

(05:22):
Walk goes through kind of the methodology of how you
look at blockchain and these new technologies and new blockchains
that are popping up in the market to look at
to integrate them into your systems.

Speaker 3 (05:33):
Yeah, definitely.

Speaker 1 (05:34):
So the order of the story there, and I can't
remember if my colleague Sandy call had gone into I'll
touch on it briefly, but you know, be coming out
of that kind of fintech roots, you know, for us,
we originally were running a validator on the Provedance blockchain right,
which it tazes back to, you know, kind of figure
and Mike Cagney, who was the founder of Lending Club

(05:56):
and so far. So we were running a validator on
a blockchains, as one does, and you end up with
you know, native coin on your balance sheet, and so
in this case, in the case of the Problenance blockchain,
we end up with a bunch of hash and then
all of a sudden it was like, you know, what
is this new type of asset a token?

Speaker 3 (06:15):
You know, it's on our balance sheet? What what is
it worth?

Speaker 1 (06:19):
And and so once once you kind of you know,
start pulling on that threat a little bit, a whole
host of questions opens up. And so, you know, I
think initially it was the combination of you know, necessity,
we have to figure out how to what this is
and how to value you know, value it as well
as you know, then you know, what can we do

(06:39):
with it? So I think from a very early point
in our kind of digital asset arc, I think we
realized the need that hey, there's a really powerful technology here,
and being a global asset manager, like what can we
do with that technology?

Speaker 3 (06:54):
And like is it a threat or is it an
opportunity or is it both and so?

Speaker 1 (07:00):
And then we also recognized that, hey, you have this
totally nascent, you know, the buddings of what could be
an acid class, and you know, fast forward today and
it really does seem like a legitimate its own acid class.
At the time, it was just like, hey, maybe it could,
you know. And so I think from inception, there were
these two sides to our business. It was a curiosity

(07:22):
to what can this technology do? And then a curiosity
to of, hey, if this involve evolves into like a
new type of acid. I mean, that's that's pretty unique
and special because it's not every day that that a
new acid class comes around, right, So I think I
think that was the genesis, the origin story.

Speaker 3 (07:40):
And then and then you know, I'll kick it back
to you.

Speaker 1 (07:43):
We can talk about, you know, how we kind of
evolved the ball or advanced the ball and I are
those two initiatives.

Speaker 2 (07:50):
Yeah, it's it's so fascinating because it seems, to your point,
we couldn't tell what this was initially, right, Is it
just blockchain and just rails? Or is also an asset class?
And it seems like it's both right, just tech, this
next layer on the Internet, but also this new asset
classes introduced UH to it, and I remember folks were
trying to go the private permission blockchain space where no

(08:13):
need for a token, But I think more folks are
realizing public blockchains are the way you do need the
token to kind of grease the wheels and make sure
everything works.

Speaker 1 (08:22):
Yeah, definitely, I remember us having some early conversations around
that that very topic and actually publishing some research around
our thoughts on you know, public blockchains and this this
sort of thing. I think, you know, giving a lot
of credit to our own in house blockchain engineers, and
you know, just kind of big fans of open source
software and the importance of that and prior technological movements.

(08:43):
So I think realizing just how battle tested, you know,
open source code can be, and then the way that
the stack works. I think you can you can build
permission save, permission DeFi applications, you know, on a permission
list chain, right, but it's it's harder to do the opposite, right,
So I think from the onset, yeah, we gravitated towards

(09:06):
these these public chains and you know right now are
building on I mean, I think it's I think it's
upwards of ten you know, public blockchains and running. You know,
it's done all these chains too, So that idea of
building on them, specifically on public blockchains and supporting consensus
and validating transactions, you know, very very important us to

(09:27):
support these networks. And then as we think about new
products to either put on those chains or how do
you how do you then package some of these exposures
so that clients who we are interested in getting access
to this technology, they have a kind of a menu
of options for them as well.

Speaker 2 (09:46):
I don't know if you can speak to this because
it kind of gets behind the scenes, but there is
some disruption that this technology brings, right. It makes things
more efficient, can lower costs and so forth. But let's
say a business that Franklin Tembleton runs. Maybe this eats
away at some of your revenue and you're not the
only one Fidelity and all the other players, right, black

(10:07):
Rock and so forth. But is there kind of a
initial hit to let's say revenue, But then you find
new revenue avenues with the technology, like being able to
tokenize certain market money market funds, and that recoups the revenue.

Speaker 3 (10:23):
I don't know if that makes sense, but yeah, it
totally does.

Speaker 1 (10:26):
And I think from that investor mindset, which is really like,
you know, first and foremost, you know, I'm an investor, we.

Speaker 3 (10:34):
Have all the buildings on our side of the platform.

Speaker 1 (10:36):
You know, that's not me. I'm more of the you know,
investing mindset. So when I'm looking at like this technology
or any one of these protocols, like I'm constantly asking, like,
what really is the value proposition here? And to your point,
is the technology here cost savings exercise or is there
something new that can be done with it, you know,

(10:58):
in terms of enhance you or an additional revenue line.
You know, So is that value proposition strictly on the
cost side or is it also on this you know,
additive revenue generating side. And so I think with respect
to our own business, it was first and foremost like, wow,
if we can bring the transfer agent function on chain,

(11:18):
you know, we can reduce a lot of those costs.

Speaker 3 (11:22):
And again, you know, we have.

Speaker 1 (11:23):
Funds and you know, stakeholders all over the world, right,
so there's a lot of there's a lot of kind
of you know, leakage in the global financial system, and
certainly as being a player, like you know, we know
this all too well.

Speaker 3 (11:35):
So there was a little bit of a light bulb
going off there.

Speaker 1 (11:38):
But at the same time, you know, not only by
bringing something like a tokenized money market fund on chain
and realizing those those costs, we realize that, you know,
blockchains afford new use cases and this idea of programmable
composable money allows you to just do things that you
couldn't do before. So this concept of day yield, right,

(12:01):
you know, it doesn't really exist in the old model,
but now I could pay interest out daily every second, right,
and so if we transfer it, the yield goes with it.
That concept of intra day yield is something new and
really enabled by the blockchain, right. And then you know,
you hear from the payments, you know, folks, you know
they're super interested because you can do streaming payments and

(12:22):
micro payments and programmable payments, and you know, by leveraging
smart contracts. So this idea of yes, it can bring
down costs and maybe in certain use cases, yeah, maybe
our firm is some of those costs. But I think
it also enhances what you can do with money and value,
and so that leads to kind of new revenue lines

(12:43):
which are pretty exciting.

Speaker 2 (12:44):
Yeah, absolutely, And to your point of new revenue lines,
does it open up more liquidity to come into certain
funds and products that you have because it's on the blockchain,
it's trading twenty four to seven and for the first time,
we can have truly global markets because let's say, I know,
certain legislations being figured out, you know how we're going

(13:07):
to handle all these things with global markets twenty four
to seven trading tokenization. But let's say someone in Africa
and a country in Africa who couldn't access these products before,
they have a smartphone, They've got some cash and they're like,
what I like what Franklin Templeton's offering here, and they
can do it because of the blockchain and they don't
have to go through all the crazy red tape that

(13:29):
was there before.

Speaker 3 (13:31):
Yeah.

Speaker 1 (13:32):
I love those examples, right because you are democratizing access.
And I think one theme right now is you know,
democratize and say alternatives.

Speaker 3 (13:40):
But here we're just talking.

Speaker 1 (13:40):
About you know, with us with a smartphone and an
Internet connection, you can have access to basic banking you
know that you wouldn't have in those parts of the world.
So it really is you know, powerful and as we
think of, you know, kind of where the where the
world and the industry are headed. And you know if really,
you know, I just have this wallet that I take

(14:00):
with me, you know, to you know, and we Sandy
always talks about moving from that account view to the
wallet view, and I just think that is that is
one hundred percent where you know, to use the analogy
and the puck is headed here and and and the
assets that you'll hold in that wallet will be you know,
your your your existing traditional assets, they'll be your cryptonative assets.

(14:23):
And then there's you know, kind of hybrid acids too,
and maybe it's your cultural assets. But again it's in
this wallet that you take with you. You own your data,
you take them with you, and that that's pretty powerful
no matter where you are in the world.

Speaker 2 (14:36):
Yeah, and you know, I think a lot about that,
the idea of the wallet replacing maybe some of the
legacy things that we have with account numbers, and you
know exactly what Sandy said, and then that wallet being
interoppable with my devices, my car and it's so it's
like anywhere I go it's sharing pulling from the same wallet.

(14:56):
I paid a toll and driving on the highway. U
my fridge does something right, all these little updates that
are done and it's coming seating from the same wallet.

Speaker 1 (15:06):
Yeah, definitely. I think you know, since this industry kind
of got started, people were imagining what could the actual
total addressable market be for blockchain technology, and I think,
you know, whatever those wild estimates were at the beginning,
like you start to realize that, yeah, you could actually
provide a digital signature, you know, not just for for assets,

(15:28):
but there are financial assets, but for for capital assets,
for you know, a whole host of things. You know,
as we just it gets to it's not just the
financial system. As the Internet gets upgraded with this technology,
and I think as it becomes abstracted away, right, it
just becomes part of our infrastructure and it affords us,
you know, kind of new tools. So I do think
that that addressable market, you know, it is quite bigger,

(15:51):
maybe we than we all initially imagine.

Speaker 2 (15:54):
Yeah, you know, some of it seems like things some
of the movies and you know, how everything will be
connected IoT a crypto blockchain. It seems we're at the well,
I've been talking about it a lot, Fourth Industrial Revolution.
You have the convergence of all these technologies and they
compliment each other and uh, you know, I was just
interviewing someone who's working on robots and AI and they're

(16:16):
looking to integrate blockchain, and yeah, robots are not gonna
use cash.

Speaker 3 (16:19):
You know.

Speaker 2 (16:19):
If we're gonna have robots in our homes or in
the factories ten years from now, they're gonna probably have
a built in wallet and use stable coins or some
digital money.

Speaker 1 (16:28):
Yeah, and especially I mean robots, I think I think
it's something physical tangible. But even as agents, you know,
working on your behalf online right, Absolutely, I doubt we're
going to see a siation you know, fun fun wires around.
It's it's probably you know, micro payments, you know, riding
around on blockchain rails.

Speaker 3 (16:47):
So I think that is the way it's added.

Speaker 2 (16:49):
Absolutely, Before we go further, I want folks to know
as much as possible what Franklin Temple is doing with crypto,
blockchain and so forth. Can you run through all the
initiatives you have running going on right now?

Speaker 3 (17:03):
Yeah, definitely.

Speaker 1 (17:04):
I'll start on the investment side of the house and
then we'll get to the building side of the house
in case you want to a double click on any
of that. So look on the on the investing side,
I think you know, we're our kind of mindset or
our philosophy is is, you know, how do you develop
kind of a full menu, right to offer exposure to
this underlying technology. So, you know, we're one of the

(17:27):
ETF players, and we're really excited about, like, you know,
the spot ETF market in the US. It's you know,
we still only have the two approve, but it looks
like more are common. We're excited for this kind of
hybrid space of taking the crypto native assets and kind
of wrapping them in that traditional ETF wrapper and offering.

Speaker 3 (17:44):
Them out to clients. Right.

Speaker 1 (17:46):
Uh, So that's exciting. I think we'll see a lot
more there. And then we think of that too as
like a form of low cost beta, right. I mean,
there's just so many good things about ets but as
you get your toes, you know, you different toes in
sometimes you want you know, act management and something more discretionary.

Speaker 3 (18:02):
And so there we kind of are thinking.

Speaker 1 (18:03):
About the world in terms of okay, there's venture capital
on the one side, and then you have you know,
active management to figure out that whole tale of the
long tail of kind of crypto assets, you know, the tokens.

Speaker 3 (18:16):
So we have kind of private.

Speaker 1 (18:17):
Funds and those offerings, and so this is all on
kind of the investing side of the house and then
on the building side of the house. You know, it
really started with that token iszed money market fund, and yeah,
so the front the term benji relates to, you know,
one Benji token is one share of ownership in this
money market fund that that's on chain and fully on chain. No,

(18:41):
no duplicate you know, books and records off chain.

Speaker 3 (18:44):
It's it's it's fully on chain.

Speaker 1 (18:46):
And so I think it you know, it started with
that and really on one blockchain, one product, you know,
and so I guess kind of fast forward, and you
couldn't do much with it. It was really like you know,
it was it was fiat currency going in and you
can buy it and you could hold it, right, And
so you know where we've kind of come from there

(19:08):
is is expanding the number of blockchains that we're on,
so kind of meeting the client where they're at.

Speaker 3 (19:15):
And so yeah, I think we're on you know.

Speaker 1 (19:17):
Called it eight eight plus you know blockchains right now,
public blockchains, uh, and and then increasing the functionality so
that concept of inter day yield, then the concept of
being able to transfer this security token back and forth
between us. You know, these are things that we're added later,
like the ability to go to swap you know, your

(19:39):
stable coins into into Benji rather than just use you know,
go Fiat into it. So I think we're trying to
enhance utility for the token. And then in parallel to
putting on more blockchains and different ecosystems on the crypto side,
we also want to in more jurisdictions around the world.

Speaker 3 (19:58):
So it was this interesting, you.

Speaker 1 (20:00):
Know, how do you bring this to more places on
chain and how do you bring it to more places
around the world, and all while doing it in a
regulatory compliant way. So I think a lot of the
effort has been creating those pathways from a technological standpoint
and a regulatory standpoint. And now that you know, we

(20:21):
we kind of know how to do that, you can
you can think about other funds or products or or
services that can travel through these same channels, right, So,
you know, I think in terms of roadmap there's still
low hanging fruit to do with with Benji itself.

Speaker 3 (20:37):
That the use case that Benji's also evolved. It originally was.

Speaker 1 (20:40):
Kind of more used for treasury management, for for you know,
crypto firms for instance, dows and protocols, that sort of thing.
It was used as as some some payments, and now
it's really seen a lot of use as as collateral.

Speaker 3 (20:56):
Uh.

Speaker 1 (20:56):
And so that's kind of an exciting use case that
that's that's evolved, right, So, you know, excited with where
that's headed. And I think the idea, the broader idea
of this, you know, tokenization of real world assets putting
them on chain, that is the opposite of the etfisation
of the crypt of native assets and bringing that off chain, right,

(21:17):
So we think we think we're coming at it from
both sides and and and that whole space will just
continue to kind of evolve in and be pretty interesting.

Speaker 3 (21:26):
Oh for sure.

Speaker 2 (21:28):
You mentioned there's about eight to ten blockchains that you've launched.
They took a nice fund on how what goes through
the process of selecting a blockchain? Are you looking at security, liquidity,
the amount of users and activity and things like that.

Speaker 1 (21:42):
Yeah, I say that's a great question because it really
highlights kind of the synergy between different parts of our
digital assets platform. So you know, on the one hand,
you have the pure you know kind of technology like
any any web three founders thinking about what you should
I build on? And so you know they're absolutely approaching

(22:03):
it from what is the you know, what's the programming
language and the tech stack, and what's our you know,
security of the chain look like you know, when it
was the last you know kind of downtime incident and
that sort of thing.

Speaker 3 (22:14):
And then there's the you know, well, where are where
are the users?

Speaker 1 (22:17):
You know, where's where's the capital that actually desires you know,
an on chain money market fund, and and what's the
growth of these various ecosystems and so, you know, on
the on the investment side, we're trying to figure out,
you know, you know, which of these protocols are gaining
market share or losing market share?

Speaker 3 (22:36):
What are those native coins worth? You know, so we're looking.

Speaker 1 (22:39):
At you know, user cohorts and retention and fee activity
and you know all of that, right. And then on
the building side, you know, you know, they're and we're
doing this kind of in conjunction. They're going through smart
contract audits and and and talking to developers and that
sort of thing, and so we kind of come together
to really talk about, you know, where where should we

(23:01):
go next? Right, And a lot of the work that
we do on the investment side helps inform that process
and and vice versa.

Speaker 2 (23:09):
And then I'm sure there's some similarities to the ETF
products selecting new all coins to launch products around. I
believe you folks have Solana, x RP and some others
applications in play. You probably can't talk much about it,
but I'm just curious the methodology there.

Speaker 3 (23:26):
Yeah, definitely, it's it is quite so similar.

Speaker 1 (23:30):
And there we get a further collaboration between you know,
our our kind of traditional ETF colleagues and the digital
assets team. So, you know, I think the whole launch
of the ETF was was such an amazing kind of
collaboration right between tradify and kind of DeFi and I
think as as people are thinking through, you know, how

(23:51):
do you do some of these ETFs as a staked version.
You know, I think that's super interesting, right because there's
just a lot of open questions that need to be
kind of, you know, figured out, and that really does
take the combination of you know, people who understand it,
you know, crypto natively and from our say note operations
perspective to you know, how do you integrate this into

(24:11):
you know, trad FI because at the end of the day,
it's it's an ETF and you know it's going to
have to have liquidity and that sort of thing. So
it's a it's a great kind of collaborative discussion there.
And yeah, you mentioned uh, you know some of the
ones we have in application and then and the ones
in kind of production you know, Bitcoin Ethereum, and then we.

Speaker 3 (24:31):
Also have easyps.

Speaker 1 (24:33):
It's it's uh, it does kind of a market cap
weight of the two of them in the ideas is
more get approved, Right, this thing could evolve and start
to look like almost like an index fund, you know
of crypto.

Speaker 2 (24:45):
You know, in the early days of crypto, and I
considered myself an early adopter, the way to get access
to this acid class was simply going to coinbase or
some exchange, buying the asset, uh keeping it on coin
based or putting on a hardware wallet.

Speaker 3 (24:57):
Right.

Speaker 2 (24:57):
But now with these ETF products, do you belie if
these will become the biggest on ramps given that there's
already an infrastructure in TRADFI, retirement accounts and all these things.
Uh R I A S and both managers are gonna
say they're not gonna buy it directly for the climb
or go through the ETF route. Do you think the
ETF has become the biggest on ramp for this asset class.

Speaker 3 (25:19):
Yeah, I think they become one of the big ones.

Speaker 1 (25:22):
But you know, it's so fascinating because I think there
are like pros and cons to all these different rappers, right,
and so while someone I mean, you have to you
have to choose one first, right, And so you know,
I know plenty of people as I'm sure you do.
You know, they they first came into this, you know,
through kind of self custody or through or through a

(25:42):
centralized exchange or but but now they're coming in, you know,
through the ETF. But they start there and then I
think and maybe they start with bitcoin, right, and just
like once you start with bitcoin, for why, you kind
of get curious about some other things too. I think
once you start with one of these rappers and understand
and it's pros and cons, you realize, yeah, there's there's

(26:03):
benefits to these all these different kind of rappers and avenues.
And so I don't think one is gonna kind of
trump you know, others, so to speak, or be like
the end all be all, But I think you'll see
people use these for different you know reasons, so you
know when it when it's uh spot, you know, even

(26:24):
on an exchange, right. But you know, right now, we
don't have a wash sale rule for crypto if it's
in an ETF, though, I can put that into a
tax advantaged account, you know obviously with respect to do
I need to memorize.

Speaker 3 (26:36):
My my keys or not? Am I okay? You know?

Speaker 1 (26:40):
So am I really okay with self custody? Or am
I okay? Having someone help me with that?

Speaker 3 (26:45):
You know?

Speaker 1 (26:45):
With ETF's kind of easier to you know, write covered calls.
I mean, there's there's just so many different kind of
nuances to all these different you know, kind of rappers
and having that that crypto exposure sitting next to my
my traditional assets, you know again because we're still in
that account view world, not fully in the wall at
view world yet, but uh.

Speaker 3 (27:04):
Heading there right.

Speaker 1 (27:05):
So I think I think there's pros and cons of
all these different you know kind of avenues channels.

Speaker 2 (27:11):
Yeah, for sure. And then the second question was you
mentioned the index and right now just bitcoin and ether,
but as the other all coin ETFs get approved, we
can see those assets get added to the index ETF
and what we've seen in the for a long time,
you know, the index have performed better or they're larger
than the individual socks, so you can get exposure to

(27:34):
S and P five hundred or the NASDAC. Do you
think it's going to be the same thing where these
index ETFs become larger than the individual ETFs.

Speaker 1 (27:42):
Yeah, they they certainly could, I think, Uh, you know,
it'll be interesting to see because unlike a company that
can say, you know, go bankrupt, you know, a protocol
and it's market cab. It can it can hang out
around right through cycles and maybe maybe there's some you know,

(28:05):
market cap erosion to some of its competitors, but it
can still have a decent valuation for for quite a while.
So it'll be interesting to see if you know, if
the if an index that just takes all of these
you know whatever whatever happens to be in the top
ten without any kind of overlay or rule based system
or or any kind of discretion around it. You know,

(28:26):
it'll be interesting to see if those really take off
or or if it will continue to be kind of
like it is in the spot market, where you know,
maybe not tribal is not the right word, but you know,
there's definitely camps that have their favorite you know, ecosystem
we're going and so I wonder iful we'll see that
kind of loyalty with respect to the ETF options as
as we see you know, with holding it. You know,

(28:49):
spot that'll be interesting. And then I think to your
to your question about the e t F as a
type of buyer and you know, growing in size and
where will that go? And I think that's super fascinated
to keep an eye on it. And then obviously in
recent news, we have a new type of buyer, the
corporation or the digital ass of treasury company. And it's

(29:09):
really these two types of buyers almost in tandem, right
that the ETF complex on the one side, and now
this group of you know, treasury companies on the other side,
you know, kind of buying up. And it's making this
cycle feel a little different. It's feeling a little bit
more you know, institutional than perhaps prior cycles. I mean,
I guess the nature of that marginal buyer is changing,

(29:33):
you know, kind of this time around.

Speaker 2 (29:35):
Yeah, it definitely feels like institutions are leading the charge
this time around, not to say, retail is not involved,
and I believe retail is going to be coming I
think soon as this market heats up into the fall.
But it feels like institutions are leading the charge here
and it's like they they've had that moment at Aha
moment and they're all going in obviously, just like Franklin

(29:58):
Templeton launching ETFs building.

Speaker 3 (30:01):
Uh. It's exciting to watch that play out.

Speaker 2 (30:04):
So I guess a good question or good segue is
to crypto legislation and how that affects what Franklin Templeton
is doing. I guess we can start with the Genius
Act with that being passed into law, the stable Coin Bill.

Speaker 3 (30:16):
What does that mean for Franklin Templeton.

Speaker 1 (30:18):
Yeah, so I think that's huge because well, you know,
I mean look, first time lawmakers took carbon a week
out to really kind of focus on crypto legislation. I
mean that that's amazing and to get you know, the
progress that was made, you know, kind of across the bills,
but especially a Genius Act and signed into law and
really having that regulatory framework for for stable coins in particular,

(30:42):
you know, I think that's that's that's huge. So and
and stable coins obviously you know that they need to
be now you know part of the rules, it's got
to be back to you know, one for one and
certain type of collateral. And this is all quite bullish
for the US dollar, also quite bullish for for money
market money market funds and treasuries in general.

Speaker 3 (31:05):
Right.

Speaker 1 (31:05):
So, but having that framework, I think it's just huge
because now you know, infrastructure providers, you know, can can
really kind of embrace this and innovate and iterate on
different kind of what you can do with this, and
they don't have to worry about you know, kind of
regulation by enforcement.

Speaker 3 (31:24):
Right, we have clear rules.

Speaker 1 (31:26):
Well what's interesting though is is we don't have rules
yet for the rails that these stable coins travel on, right,
So obviously that's coming next. So while while genius was tremendous,
you know, I think it is tip of the iceberg.
Obviously there's more coming and hopefully this is just a
trend that will continue in a tailwind that will really
kind of continue for the industry.

Speaker 2 (31:47):
I don't know if you can answer this, but I
got to ask, are you looking at launching your own
stable corn or will you just be using the stable
coins that are out there?

Speaker 1 (31:56):
You know, I think in general we're going to see
I mean, the banks are clearly say I think we're
gonna see like lots of different types of firms, uh,
you know, launch their own stable coin and they'll be
almost like, you know, a brand connected to it. I
think the key though, right is obviously there has to
be enough liquidity between all these stable coins. Yes, they're

(32:18):
all back one one five dollars, but if if you
know the supply demand dynamics for a more niche you know,
stable coin, like if it's not if the depth isn't there,
you know it could be it. You know, it could
trade a little off of a dollar, right, just because
of supply demand dynamics. So one of the things I
think we're interested in keeping in a close eye on is,

(32:41):
you know, what are all the stable coins that are
that are coming out, you know, being launched by who,
how are they able to kind of build that liquidity?
And then also, you know, I think so important in crypto, right,
it's not just building the first thing. We've got to
integrate it into the rest of it to really take
advantage of the composability of crypto and blockchain. So you know,

(33:02):
I think we are going to see lots of different
types of players launch their own stable coin.

Speaker 3 (33:06):
But that's something I'll be curious.

Speaker 1 (33:08):
To follow and track, and I guess we'll see how
it progresses.

Speaker 2 (33:13):
Yeah, because it's to your point, just launching a stable
coin without the distribution and a proper network. It's not
And I think of like Circle, you know, partnering with
coin base, that strategic partnership and Coinbase helped with the
distribution of USDC. I think that really helped u SEC.
But uh, yeah, we'll see. It looks like everybody in
their grandma is going to launch a stable coin and

(33:36):
there might need to be some consolidation at some point.

Speaker 1 (33:39):
Yeah, definitely, And I think obviously there's some some fine
printing around that, you know, not not everybody can launch
a stable coin, but I think we're gonna see, you know,
white label solutions and other things. I do think it's
gonna be an interesting kind of trend to to follow
who was actually launching, you know, who's helping with the
building that out and then how is that all connecting to.

Speaker 3 (34:00):
Form little liquidity and the integrations to really kind of
get the flybell going. M hm.

Speaker 2 (34:06):
You know you mentioned the market structure Bill right, you
alluded to it, the Clarity Act that is set to
pass in September. Knock on board. Hopefully that gets done
Congress pushes it through President Trump sized into a law.
Do you think that's just gonna unlock incredible innovation and
building in this technology and industry because once again no

(34:28):
regulation by Unfortunately you don't have to look over your shoulders.
You can just be heads down building.

Speaker 3 (34:32):
Yeah, I think it's I think it's hugually important.

Speaker 1 (34:35):
And I do you think right there there is it
seems like there's all some more more work to be
done there. I mean, I'm sure the Senate's gonna have
some sent change it is, and they'll be you know, iterations.

Speaker 3 (34:44):
But I am optimistic like you are.

Speaker 1 (34:47):
I think I think we'll see you know, positive momentum
resume here in the fall when they kind of come
back and uh so super encouraged by I think, what
can actually get done, you know here in the balance
of the year, and then what it means for the
industry because we've got the framework for stable coins as
kind of digital programmable money. You know, if we can

(35:09):
get the right you know, framework around the protocols themselves,
those those execution environments, the blockchains, but also you know
what it means to be an application building on these chains.
I think that's huge and and how the regulation works,
because quite frankly, that's that has held. I think, you know,
some of the innovation backs are certainly in this this country.

Speaker 3 (35:30):
So very much looking forward to that. I'll just be
a continued, you know, kind of tailwind I think for
the industry.

Speaker 2 (35:37):
Oh, absolutely all loves to get your perspective on you
and your competitors on UH in the trad five world,
UH in this race to now adopt this technology. And
I know you probably can't give away too much, but
I'm curious, you know, what are you looking at?

Speaker 3 (35:53):
What are you thinking about? Are you paying.

Speaker 2 (35:55):
Attention to it? You know, your your fellow competitors are
doing and is in a race? You know, do you
feel the same way? From my outside view looks that way,
But how do you feel about it?

Speaker 1 (36:07):
Yeah, I mean, the the first thing that pops in
my mind is, I mean one of the benefits of
of kind of being at the at the cutting edge
of still a small industry is you know, it's it's
so much more collaborative, I'd say, then it feels so much.

Speaker 3 (36:25):
More collaborative than competitive. You know.

Speaker 1 (36:27):
So my my peers at at you know, at all
of our kind of you know, peer firms, you know,
like we're all trying to kind of push the industry
forward together, right, and and a lot of times we
are talking to the same clients and we're doing it,
you know, globally, and so often you know, I'm in
a room and I'm not even like pitching product, right,

(36:49):
and I'm just educating about what, you know, what blockchains
can do, what digital assets are, you know, how we
think how an institutional you know kind of asset manager
thinks about valuation and fundamentals in this space where we
think it's going what we're seeing in the innovation pipeline,
it's really just do.

Speaker 3 (37:05):
An education, right.

Speaker 1 (37:07):
And then you know my peers are doing doing that
as well. And it is a nuanced technical industry. It's
still nascent, and so I think all this education is
super important.

Speaker 3 (37:19):
Right.

Speaker 1 (37:19):
You kind of need to hear it a few different
times in a few different ways and have that kind
of surround sound and and then you kind of need
to see it have the Lendy effect and kind of
make it through a few cycles before you can start
to wrap your head around and get comfortable.

Speaker 3 (37:33):
With it and that sort of thing.

Speaker 1 (37:34):
So on the on the one hand, if it sometimes
feels you know competitive looking at you know, flows or whatnot,
but the but really it is much more I think collaborate.

Speaker 3 (37:47):
A lot of the time.

Speaker 1 (37:48):
We're on the same panels as each other. Again, we're
talking on the same clients and you know, around the world.
And uh, and I think in terms of product too, right,
you know, people are everybody's in and so I think
that's like the great thing, right, So that's my gentle
I actually you maybe wanted something a little bit spicier

(38:08):
in that, but it is quite collaborator. And I think
that goes back to it's still early. You know, we're
all trying to kind of move this thing forward together.

Speaker 3 (38:16):
Yeah, that definitely makes sense.

Speaker 2 (38:18):
So on that note, we got crypto legislation stable Cooin
bill passed, of course, but the Cloarity Act is the
big one.

Speaker 3 (38:25):
Let's say that gets passed.

Speaker 2 (38:26):
And look, it's going to take time for you and
your competitors to hit the ground running. Fully, there's a
lot of trial and error, testing, R and D and
so forth. When do you think we will be at
a point of maturation where it's ready for full mainstream adoption,
So where the average Joe and Jane walking down the
street may not be as tech savvy. You know, they're

(38:49):
not part of the early adopter crowd. But it gets
a point where it feels like Web two, but it's
powered by Web three and you're getting all these additional benefits.
Is it twenty thirty or beyond that?

Speaker 3 (39:01):
Yeah?

Speaker 1 (39:01):
I think so. Having the right regulatory frameworks is huge.
And then with that extra clarity you can fill in
some of the gaps that exists in the infrastructure right too,
to make this as seamless as I think, where you
know where your vision's going. So I think those are

(39:23):
are some critical next steps. And then in terms of,
you know, continuing to onboard new types of people and
and one of the amazing things with crypto right it's
it's it's not just something you buy and hold and
put it on a shelf. Right crypto is meant to
be used. And so it's one thing to onboard someone
in terms of okay, now it's part of the portfolio.

(39:44):
It's another to onboard them into using it and realizing
firsthand some of those benefits and that a lot of
times comes second, right, So I think a lot of times,
you know, they have a they own it first, and
then they use it. And so I think, you know,

(40:05):
in terms of flows, we'll see more people open their
mind and embrace it as a legitimate NASA class and understand.

Speaker 3 (40:13):
Its role in the portfolio.

Speaker 1 (40:14):
And what's interesting, right, is what we don't think, you
know necessarily bitcoin plays the same role in a portfolio
that say, you know, some other digital assets. So you know,
once you once you kind of figure out where it's going,
what are you funding it with, and how are you
sizing appropriately, what's your time horizon, and then you you
make the investment, then I think you start to do more,

(40:38):
maybe maybe round out that investment or start to kind
of use it and play with it. And then I
think as as we move from this world of account
view to digital wallet view, you know, it goes back
to the infrastructure point, some more things need to be
built out, I think to make this, to make this work,
and so I think that.

Speaker 3 (40:57):
Part will take a little bit more time.

Speaker 1 (40:59):
Twenty thirty though, Well, the cool thing about the exponential
technologies is it does move quickly. But I think we'll
get some good stuff done by twenty thirty for sure.

Speaker 2 (41:09):
Yeah, you know, because I still see, you know, more
of the infrastructure needs to be built out for like
just thinking about like.

Speaker 3 (41:17):
My mom and dad and yeah older.

Speaker 2 (41:20):
But you know, the adoption might come through their banks
because they trust the bank they store their money in,
or maybe a social app they use YouTube and Facebook.

Speaker 3 (41:33):
I don't know.

Speaker 2 (41:34):
It's fascinating and I don't know what that's going to
look like, but maybe it's through the banks because that's
an institution they trust and it would fit in that
a category of finance and investments.

Speaker 3 (41:48):
Yeah, definitely.

Speaker 1 (41:49):
And I think and I think it will be get
it will become more abstracted away, right, Like if we
think about who are the power DeFi users five years
from now, very much right, it could be the institution
give me bank exast managers and you know, actually using
DeFi the most, and they're using a kind of behind
the scenes you're I think you're always gonna have, you know,
a strong kind of retail component who absolutely loves rolling

(42:13):
up the sleeves and getting kind of dirty with all
these different protocols and trying things try not the latest thing,
but in terms of you know, swaps and and uh
you know, borrow, lend and some even some of the
more you know, kind of newer and more or more
exotic features that defy enables. You know, it might be
institutions at the end of the day, right, being the
actual power users of those protocols.

Speaker 2 (42:36):
Do you think that they could do it instead of
the well, they can give the option of, hey, we'll
do the whole DeFi set up here and earn this
additional yield for you. Obviously the banks and these institutions
will take a cut, but it'll be easy.

Speaker 3 (42:52):
You know.

Speaker 2 (42:52):
The person who's were a client or a customer of
the bank would have to think about these things. They're like,
you know, this is too much for me, But if
the bank doesn't for me, that sounds cool.

Speaker 1 (43:02):
Yeah, definitely, I mean, there's definitely part of the value
proposition is simplifying this make it easy.

Speaker 3 (43:09):
You know, I've heard some models where you know that you even.

Speaker 1 (43:12):
Have a phone number to call, like right, like you know,
it's just like, you know, what does customer service look
like in a in a product that uses kind of
defining the back end, you know, but but with you know,
some kind of more white glove service on the front end,
you know, for for whatever client you know and market.
I think I think it's a design space that will

(43:35):
continue to evolve. I think the key is this is
where the regulatory comes in, right, you know, it's one
thing for the software to just you know kind of
work and that has its own regulatory framework. But as
soon as there's kind of a centralized actor in there,
you know, performing some value added service supposedly on top
of this, you know, I just think they're.

Speaker 3 (43:54):
Right obviously proper oversight and controls around all this.

Speaker 1 (43:56):
But I think in terms of the design space, a
lot can be done and that can help onboard new
users as well.

Speaker 3 (44:03):
Mhm, what's on your room map?

Speaker 2 (44:05):
But but what can you share and uh, what can
we expect over the next six months or so?

Speaker 1 (44:10):
Yeah, well, I think as a as a firm, I think,
you know, kind of going back to are kind of
you know, kind of to two full model of being
builders in the space customers of these blockchains users, and
trying to do more with our existing product lineup through
you know, kind of the Benji you know, sweet so
to speak, you know, maybe bringing new products into the

(44:32):
into those kind of channels that we've built out now
as well as on the on the investing side, I think,
you know, helping with the education and onboarding more clients
into crypto who will embrace digital acids as as an
asset class in their portfolio construction. I think, uh, there's

(44:54):
certainly a lot to keep busy on on both sides,
So I'll probably spendy more my uh you know kind
of time on the uh on the investment side. But again,
what I love about, you know, kind of just the
way we built up this platform. Uh, you know, we
work hand in hand right with those in house blockchain engineers,
and not just in terms of uhh feedback, but also
thinking about you know, kind of where it's all going,

(45:16):
you know, try trying to trying to actualize the Sandy calls,
you know kind of vision, and so I think a
fun road ahead.

Speaker 3 (45:25):
Well I love it.

Speaker 2 (45:26):
Uh you know, I followed Franklin Templeton for many years
and you guys have certainly been ahead of the curve
in many ways with this technology.

Speaker 3 (45:33):
So I'm excited to.

Speaker 2 (45:34):
See what rolls out next, and uh, you know, what
have you back on talk about the new products and
services and things like that. I got some wrap up
questions here for you. First, if you could create your
own metaverse, what would theme be?

Speaker 1 (45:48):
Ooh, you know, it would definitely be something in I
think the video game space, as I mentioned, and that
was where I first got real crypto pilled, you know,
back in the Accial Infinity days and the Parallel card game.

(46:09):
You know, before there was a game, right, people just
collected the cards. I've since kind of played it with
my son, who's a you know, an avid Pokemon fan.
So I think a metaverse that that I would either
design or want to spend time, and especially as I
think about bringing my kids in more into kind of crypto,
I think using a using the video game type of

(46:31):
metaverse is a great you know, kind of uh trojan
horse if you will to get them exposure to uh
this new type of technology.

Speaker 2 (46:41):
Oh for sure. Rapid fire questions. Favorite food Korean through
Korean barbecue. I love barbecue as well.

Speaker 3 (46:53):
Favorite musician or.

Speaker 1 (46:54):
Band Sublime and Mantociajo kind of you know, I like
that genre. Nice favorite movie, Uh there I go with
this Matt Damon duo of good Will Hunting and Rounders.

Speaker 2 (47:12):
I good Will Hunting, I mean, just a great movie.

Speaker 3 (47:16):
You know, I don't think I've ever seen Rounders. I
gotta gotta check down. It's fantastic.

Speaker 1 (47:20):
H and it's you know, most people get into poker,
they did of my generation, either when Chris Moneymaker, you know,
one of the world. Here's a poker on ESPN. The
first time was tall a Lies or by watching the
movie Rounders, and I got in through the movie Rounders.

Speaker 3 (47:36):
I'm gonna watch it tonight. I got check it out.
Favorite book, Tell Two Cities. Mm hmm.

Speaker 2 (47:46):
When you're not working at Franklin templeton, what are you
doing for fun?

Speaker 1 (47:51):
Playing with playing with my kids. And I do like
I do like poker a lot of is kind of
alluded to. And I like outdoor cooking and I have
four different types of barbecue grill cooker apparatus in the backyard,
and I like outdoor cooking.

Speaker 2 (48:07):
Well, I'm we'd there with you because I have a
regular size grill. Then I just bought a griddle for outside.
So about you up more outside, So we'll do it.

Speaker 3 (48:17):
Christopher Pleasure chatting with you.

Speaker 2 (48:19):
Love what Franklin Temple's doing in the digital asset blockchain space.
Thank you so much for joining me. And like I said,
I'd love to have you back on as new things
are launch on your front.

Speaker 3 (48:28):
Thanks Tony, take care,

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